Sunday, April 11. 2010

That Twitter would eventually take over the more popular 3rd party functions was 100% predictable since Microsoft built Excel. That it would happen now was harder to predict, though there have been rumblings for at least 6 months, so the Ecosystem's gnashing and wailing is a tad overdone. I mean, what did they expect - that Twitter would carry on taking all the costs of building out a service while they took the revenue and customer relationships?

Geeks consider having to wade through half a dozen Twitter clients before finding one that works for them a feature even though paradox of choice means that most people (ie the main user base - Ed) are actually happier with less choices not more.

This is made worse by the fact that in the mobile world, this may mean paying for multiple apps until you find one that you’re happy with

.
We thought that chasing the Twitter Ecosystem as a pure play was a tad daft when we wrote 6 months ago to Beware of the Twitterbubble:

....to put one's eggs in the Twitter basket is a big risk, as you are essentially handing power over to a proprietary environment owned by a 3rd party that itself does not yet have a route to making profits - in fact in our view its most likely route to profit is a charge on those same services using its ecosystem. There is also, in our view, very little barrier to entry for newcomers so it will be hard to ensure a competitive advantage.

Hey, don't say we didn't tell you so

OK Smart*rse, I hear you say - now what? Well, really, there is only really one option - sell your business before Twitter plugs it up or some other startup in your area does. There are is only one XXX that Twitter will buy. There are 3 sub options:

- Keep on chooglin' and hope you can suck more money out of dumb money investors (the smart money knows its over) to keep going long enoigh to diversify

- Go on trying to grow your share to be Bigger than Twitter's play in your space. Your dedication to the cause may just win this so they have to buy you too.

- Try and identify a competitor and sell to them.

But as for Keeping On Keepin' On, well, that's just going to get a lot harder, especially for the Non-number ones. What I expect to see is lots of 3rd party people jumping out of the obvious Next-Grab holes into ones that look further away and well as some Desperate Attempts to sell early to Twitter.

I agree with Fred Wilson’s post that startup applications shouldn’t simply be plugging in minor feature gaps in Twitter’s offering. Or if they do they should do so without raising venture capital so that they can still be acquired for reasonable prices. Actually, the latter could be a reasonable strategy for super technical entrepreneurs who can sustain themselves without big financing needs (see: Atebits, owner of Tweetie). I articulated in a previous post that startups should not treat the iPhone as a business but rather as a channel. The same is true of Twitter, and as a VC I would personally never fund a company that looked to simply plug a functional gap in Twitter.

You're right re iPhone market at 4%, but its near 1/3rd share of smartphones, which use Apps. The main thing though is that smartphone apps cost money, so Twitter can no longer afford to have 3rd parties own the channel to the user.

E-Mail addresses will not be displayed and will only be used for E-Mail notifications.

To prevent automated Bots from commentspamming, please enter the string you see in the image below in the appropriate input box. Your comment will only be submitted if the strings match. Please ensure that your browser supports and accepts cookies, or your comment cannot be verified correctly.Enter the string from the spam-prevention image above: